Mortgage Assignment/Subject to Financing Investing methods have the National Association of Realtors (NARS), the Mortgage Compliance and Service Industry and various banks across the country up in arms. There is not any regard to any professional underwriting and it's a violation of the SAFE Act!
Real Estate Investors using Mortgage Assignment/Subject to Financing investing methods are becoming more similar to what the banks did by using shady sub-prime lending practices.
Mortgage Assignment/Subject to Financing Investors are giving access to "want to be" home buyers who cannot get a traditional loan. These poor quality buyers are being put into a transaction that is ALREADY BAD by simply allowing them to take over the poor quality mortgages of another home owner in distress ILLEGALLY! Come on... THINK, if these buyers were of good quality they could get a traditional mortgage. The new buyers / borrower's ability to repay the loan is questionable based on a number of criteria. They types of buyers being put into these transactions are the same low standard what a sub-prime borrower was.
Mortgage Assignment/Subject to Financing Buyers have a:
o FICO Score of 660 or less.
o Late payments to any creditor within the last 12-24 months.
o Collection accounts.
o Any repossessions within the last 5-7 years.
o Bankruptcy within the last 7 years.
Otherwise they could get a loan. Are these the type of people you want to place in homes?
Promoters of Mortgage Assignment/Subject to Financing methods claim the way around this issue is to simply get the seller to sign a CYA (cover your ass) letter to disclose the practice. Just because you have a signed "cover your ass" disclaimer does not make this method legal! This letter is NOT a normal letter in any other real estate transaction making it complex, shady and underhanded method to keep it secret.
Sub-prime lenders have run into a lot of financial trouble making loans to unqualified buyers. The default rate on these type of loans is at an all time high and people are losing their homes at an alarming rate. Several large lenders that specialized in loans to questionable borrowers have filed for bankruptcy. This is why the news is full of stories about the sub-prime mortgage crisis. What makes a real estate investor think that by using Mortgage Assignment/Subject to Financing methods that they are not going to be held accountable when it goes bad?
The US sub-prime mortgage crisis was one of the first indicators of the 2007–2010 financial crisis, characterized by a rise in sub-prime mortgage delinquencies and foreclosures. Approximately 80% of U.S. mortgages issued to sub-prime borrowers were adjustable-rate mortgages. After U.S. house sales prices peaked in mid-2006 and began their steep decline forthwith, refinancing became more difficult. As adjustable-rate mortgages began to reset at higher interest rates, mortgage delinquencies soared.
Now.... some so called real estate gurus says Mortgage Assignment/Subject to Financing is the answer???
You got to be kidding me! They say that their attorneys said they are legal, BUT they still tell you NOT to send the bank the letter and confirm what you have done!
In my opinion these info marketers are unscrupulousness and are only trying to make a buck. I can assure you that doing Mortgage Assignment/Subject to Financing deals are going to come back and Bite YOU just like the sub-prime industry loans.
Stay aware from Mortgage Assignment/Subject to Financing Methods!